annual report 07
annual report 07
annual report 07
Beijer Alma AB (publ) is an internationally active industrial group focused on production of components. Its business concept is to acquire, own and develop small and mid- sized companies with favorable growth potential.
contents
2 Ten-year summary 3 Chairman’s Statement 4 President’s Statement 6 Strategy
8 Risk analysis 10 The Beijer Alma share 12 Lesjöfors AB 20 Habia Cable AB 28 History
29 Administration Report 31 Income statements 32 Balance sheets 34 Changes in equity 35 Cash-flow statements 36 Notes
52 Corporate Governance 54 Audit Report
56 Board of Directors and Management
58 Addresses
reports
All reports can be requested from:
Beijer Alma AB
Box 1747, SE-751 47 Uppsala Telephone +46 18-15 71 60 Telefax +46 18-15 89 87 or download from www.beijer-alma.se
contact persons
Bertil Persson, President & CEO Telephone +46 8-506 427 50 E-mail bertil.persson@beijer-alma.se Jan Blomén, Chief Financial Officer Telephone +46 18-15 71 60 E-mail jan.blomen@beijer-alma.se
Proactive, long-term strategic and development work, com- bined with investments and complementary corporate acqui- sitions, results in competitive companies in selected market segments. In each segment, the Group’s companies focus on developing strong relationships with customers offering growth and profitability. Important criteria for long-range and profitable growth of the companies are:
Products
• and concepts with a high customer value International
• market coverage
High
• market share within current segments Diversified
• customer base
Beijer Alma works on the basis of active and long-term ownership. The companies are not developed with the aim of a future exit. Instead, the goal is to own and develop successful companies with high growth and profitability.
Beijer Alma is listed on the Mid Cap list of the OMX Nordic Exchange (ticker: BEIAb).
Beijer AlmA
lesjöfors
hABiA cABle
Lesjöfors is an international full-range supplier of industrial springs, wire and flat strip components. The Group offers both standard industrial springs and customized products and has leading positions in the European market. Lesjöfors’ opera- tions are divided into the following business areas:
Industrial
• springs – standard industrial springs and customized products
Flat
• strip components – flat strip components and leaf springs Chassis
• springs – after-market for passenger cars and light vehicles
Habia Cable develops, manufactures and sells cables and cable systems for demanding applications. The company is one of Europe’s largest manufacturers of specialty cable. Habia’s opera- tions are divided into the following business areas:
Radio
• frequency & Communication – mobile tele- communications
High
• Specification Products – defense, nuclear power, infrastructure
Engineered
• Cable Solutions – power generation, hand tools, offshore
Distribution
• Products – standard cable for such applications as measuring, vehicles, lighting equipment, white goods
0 600 1,200 1,800
07 06 05 04 03 MSEK
Invoicing
0 300 600 900 1,200
07 06 05 04 03 MSEK
Invoicing
0 200 400 600 800
07 06 05 04 03 MSEK
Invoicing
Lesjöfors 62%
Habia Cable 38%
Subsidiaries’ share of total invoicing
622 MSEK invoicing
89.7 MSEK operating profit
14.4% operating margin
1,032 MSEK invoicing
222.7 MSEK operating profit
21.6% operating margin
1,654 MSEK invoicing
282.7 MSEK profit after financial items
17.5% operating margin
7.49 SEK earnings per share
63% equity ratio
0 60 120 180 240 300
07 06 05 04 03 MSEK
Operating profit
0 5 10 15 20
07 06 05 04 03
%
Operating margin
0 50 100 150 200 250
07 06 05 04 03 MSEK
Operating profit
0 5 10 15 20 25
07 06 05 04 03
%
Operating margin
0 20 40 60 80 100
MSEK
Operating profit
0 5 10 15 20
%
Operating margin
Telecommunications 18% Sweden 19%
Chassis springs 16%
Rest of EU 56%
Defense industry 5%
Rest of Europe 10%
Other industry 61%
Asia 12%
Rest of the World 3%
Invoicing by customer segment Invoicing by geographic market
Beijer Alma AB is an internationally active industrial group focused on the production of components. The Group’s operations are conducted through two subsidiaries, Lesjöfors and Habia Cable.
• Strongest result to date
• Order bookings increased by 10 percent to MSEK 1,665 (1,508)
• Invoicing increased by 11 percent to MSEK 1,654 (1,488)
• Profit after financial items increased to MSEK 283 (262)
• Earnings per share increased to SEK 7.49 (6.92)
• Proposed dividend increase to SEK 5.00 per share (4.00)
2007 in brief annual general
meeting
The Annual General Meeting will take place on Tuesday, April 8, 2008 at 6:00 p.m. in room B, Uppsala Konsert & Kongress, Vaksala torg 1, Uppsala, Sweden.
Shareholders who wish to participate in the Annual General Meeting shall be listed in VPC AB’s shareholder register by Wednesday, April 2, 2008 and notify the company of their intent to participate not later than Wednes- day, April 2, 2008 at 4:00 p.m.
Notification may be given in the following ways: by telephone at +46 (0)18-15 71 60, by fax at +46 (0)18-15 89 87, by e-mail at info@beijer-alma.se, www.beijer-alma.se or in writing, preferably using the registration form attached to the Annual report. Registration must include name, national identity number/
corporate registration number, shareholdings and daytime telephone number.
Shareholders whose holdings are regis- tered in the name of a nominee must register the shares in their own name with VPC to be entitled to participate in the Annual General Meeting. Such registration must be completed not later than Wednesday, April 2, 2008.
Shareholders who wish to have one or two assistants participate in the Annual General Meeting must provide notice of their intention to do so in the manner and within the time applicable to shareholders.
The proposed record day for the right to receive dividends is Friday, April 11, 2008.
If the Annual General Meeting votes in accord- ance with the proposal, dividends are expected to be paid out through VPC AB commencing Wednesday April 16, 2008. The Board of Directors proposes to the Annual General Meeting a dividend of SEK 5.00 per share.
A complete notice, including an agenda and proposals, can be ordered from Beijer Alma by telephone at +46 (0)18-15 71 60, by fax at +46 (0)18-15 89 87 or by e-mail at info@beijer-alma.se. This information is also available at www.beijer-alma.se.
financial calendar
Beijer Alma’s year-end report and quarterly reports are published on the company’s web- site at www.beijer-alma.se. The Annual Report and quarterly reports are automatically sent to shareholders.
April 8 Annual General Meeting April 24 Quarterly report,
January 1-March 31 August 14 Quarterly report,
April 1–June 30 October 24 Quarterly report,
July 1–September 30 February Year-end report March Annual General Meeting
300 600 900 1200 1500
10 20 60
40 80 100 120
2003 2004 2005 2006 2007
© OMX AB Kursutveckling 2003–2007
B-Aktien
OMX Stockholm_PI Omsatt antal aktier
Aktiekurs, kr Månadsomsättning, 1000-tal
Share performance 2007
Class B shares
OMX Stockholm_PI Number of shares traded
Share price, SEK Monthly trading volume, 000s
120 110 100
90
80
70
60
400
300
200
100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: OMX AB
Key figures 2007 2006 2005
Net revenues, MSEK 1,654 1,488 1,323
Profit after financial items, MSEK 282.7 262.2 199.8
Operating margin, % 17.5 18.0 15.6
Dividend per share, SEK 5.00 4.00 3.67
Ten-year summary
MSEK 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998
Net revenues 1,654.4 1,487.8 1,323.1 1,201.6 1,154.0 1,113.0 1,320.2 1,132.5 1,031.0 1,072.2
Operating income 289.6 268.4 206.7 166.4 39.7 32.4 32.3 129.1 88.3 102.2
Net financial items –6.9 –6.2 –6.9 –11.4 –21.7 –27.6 –30.3 –19.0 –12.6 –9.3
Profit after financial items 282.7 262.2 199.8 155.0 18.0 4.8 2.0 110.1 75.7 92.9
Items affecting comparability – – – – – –99.9 – 9.6 13.0 5.1
Profit before tax 282.7 262.2 199.8 155.0 18.0 –95.1 2.0 119.7 88.7 98.0
Tax –77.2 –72.4 –57.8 –39.7 –10.5 11.1 10.3 –38.3 –33.5 –32.8
Net profit 205.5 189.8 142.0 115.3 7.5 –84.0 12.3 81.4 55.2 65.2
Non-current assets 607.8 526.8 558.4 561.3 624.4 657.5 839.3 603.8 444.6 440.8
Current assets 741.6 691.6 621.7 557.5 502.4 519.0 590.0 541.1 424.1 425.0
Shareholders’ equity 846.7 747.8 708.9 566.4 449.7 458.3 577.4 482.3 424.7 397.8
Long-term liabilities and
provisions 68.0 100.9 126.2 169.2 230.2 299.0 376.6 268.8 204.0 233.9
Current liabilities 434.6 369.7 345.0 383.2 446.9 198.3 475.3 393.8 240.0 244.1
Total assets 1,349.4 1,218.4 1,180.1 1,118.8 1,126.8 1,176.5 1,429.3 1,144.9 868.7 865.8 Cash flow after capital
expenditures 120.0 121.0 142.6 197.2 74.8 116.2 –85.8 –172.7 50.7 –122.9
Depreciation and amortization 65.3 68.8 65.2 76.9 89.6 96.6 86.8 64.3 54.7 42.0
Net capital expenditures
excluding corporate acquisition 79.2 71.0 48.0 48.0 55.1 18.3 116.0 114.0 69.6 66.1
Capital employed 1,044.9 932.1 876.3 850.2 909.6 967.9 1,189.3 875.5 645.4 627.8
Net liabilities 32.8 –6.8 43.0 178.3 386.9 462.4 579.8 375.4 180.7 195.9
Ratios, %
Gross margin 37.4 37.9 36.8 35.9 28.9 30.7 29.0 35.3 32.4 31.9
Operating margin 17.5 18.0 15.6 13.8 3.4 2.9 2.5 11.4 8.6 9.5
Profit margin 17.1 17.6 15.1 12.9 1.6 0.4 0.1 9.7 7.3 8.7
Equity ratio 63 61 60 51 40 39 40 42 49 46
Proportion of risk-bearing
capital 65 64 62 53 43 43 44 46 53 50
Net debt/equity ratio 4 –1 6 31 86 101 100 78 43 49
Return on equity 25.5 25.9 22.6 22.0 2.9 0.7 0.3 17 13 18
Return on capital employed 29.9 30.0 24.3 19.3 4.5 3.3 3.3 17 17 20
Interest-coverage ratio 23.6 29.6 24.2 13.2 1.7 1.2 1.1 6.1 6.9 8.9
Average number of employees 1,163 980 907 805 896 940 1,092 943 851 728
In this and all other tables, the years 2004 to 2007 are calculated in accordance with IFRS and prior years in accordance with the accounting principles applicable at the time.
Following several years of high profita- bility, I am pleased to say that our Group holds a strong financial position.
At year-end, the equity ratio was 63 per- cent, while the cash flow amounted to MSEK 120. We also achieved better bal- ance in our earnings due to various indus- tries, customer segments and geographic markets increasing our stability and strengthening our spread of risks. In recent years, we have emphasized the importance of diversification and through consistent efforts, we have progressed in this work.
This is particularly true in the case of Habia, whose profitability has been strengthened and its dependency on the telecom market reduced. The company’s sales to the engineering and defense indus- tries are growing and goal-oriented and long-term measures have generated clear results in these sectors.
BROAD INTERNATIONAL SALES I would also like to highlight the Group’s international sales, whose performance has been increasingly positive. Our prod- ucts are available in more markets than ever before and are a significant reason for Beijer Alma’s profitable growth in recent years.
At the same time, our goal of growing through acquisitions within existing prod- uct and market areas is firmly established.
We have successfully integrated earlier acquisitions and, as a result, this strategy has become a key driving force behind our growth. We are also open to acquisitions within entirely new areas, which we usually refer to as “the third pillar.” With expecta- tions of a weaker economic climate, oppor- tunities for such acquisitions may increase in the future, particularly considering the
overheating that has characterized the acquisitions market in recent years.
ATTRACTIVE DIVIDEND YIELD
Strong finances have also enabled us to offer our shareholders a competitive divi- dend yield, without jeopardizing our invest- ments in the continued profitable growth of the Group. This year, we have decided to further raise the dividend level and distrib- ute 67 percent of the net profit. This is an important message to old and new share- holders. It confirms the strength of our operations, as well as our confidence that
Beijer Alma’s positive trends will continue.
It is our driven and dedicated employees that make such trends possible. I would like to thank all of you for your outstanding contributions during the year. As we cele- brate the Group’s 25th birthday in 2008, we should also be pleased about Beijer Alma’s unprecedented strength.
Anders Wall Chairman of the Board
CHAIRMAN’S STATEMENT 3
Financial strength – foundation for continued growth
In 2008, Beijer Alma will celebrate its 25th birthday. As this anniversary approaches, we can reveal that the Group’s earnings and financial position are stronger than ever before. This creates considerable opportunities for future development in terms of profitable growth and an attractive dividend yield.
F ollowing a strong year-end, earnings increased in three of four quarters, compared with the year-earlier period.
This positive growth is, of course, a result of the favorable industrial climate. How- ever, the Group companies also maintained profitability and cost-consciousness, which tends to be difficult during prolonged periods of strong economic conditions.
In total, the Group’s earnings improved
•
by MSEK 21.
Habia’s earnings rose 37 percent com-
•
pared with the preceding year. Earnings also improved in all quarters compared with the year-earlier periods.
Lesjöfors also increased its earnings
•
slightly in 2007, compared with the pre- ceding year. This improvement was con- centrated in the first quarter, while other quarters were in line with or slightly weaker than the year-earlier periods.
I would like to emphasize that it was difficult to exceed the comparative data for 2006 because trends were extremely strong toward the end of 2006.
The operating margin for 2007 was 17.5
•
percent. This is marginally lower than in 2006, but considerably higher than the Group has reported during earlier business cycles.
IMPROVED EARNINGS QUALITY The overall quality of earnings in the Group has improved markedly compared with earlier cycles. The operating margin is higher and invoicing and profit are more evenly distributed within the various cus- tomer categories. As a result, the depend- ency on individual industries, products and customers has decreased. This is evident
from the changes that have occurred in invoicing to various customer segments. In 2000, telecom was the largest area, account- ing for nearly 30 percent of our total invoic- ing. In 2007, this proportion dropped to 18 percent. In the same period, chassis springs increased from 12 percent to 16 percent
and the segment other industry from 59 per- cent to 66 percent of invoicing.
Accordingly, the dependency on the tele- com sector – with few customers, a high level of technical risk and volatile demand – decreased, while better-diversified seg- ments, with a lower level of technical
Best results in Beijer Alma’s history
In 2007, Beijer Alma’s profit before tax amounted to MSEK 283. This is our best result ever and means that the Group’s earnings have now increased for five consecutive years. Furthermore, the overall quality of our earnings has improved markedly. The operating margin increased and invoicing and profits are more evenly distributed across various industries.
risk, increased significantly. Naturally, we remain dependent on the industrial climate. However, our improved diversifica- tion should enable the Group’s earnings to increase and fluctuate less than in previous economic cycles.
FAVORABLE TRENDS FOR HABIA Work conducted within Habia in recent years has made a significant contribution to the quality of our earnings. We have invested considerable efforts in developing the company’s strategy. Our goal was to maintain our strong position within the tele com sector and, at the same time, grow and improve profitability in other opera-
tions. These efforts generated positive results during 2007. While telecom sales remained unchanged, other segments – pri- marily the defense and nuclear power industries – increased by 17 percent. This resulted in overall growth of 10 percent in Habia’s sales. At the same time, profitabil- ity improved substantially in areas of the company not related to telecom. As a result, Habia’s operating margin increased from 11.7 percent to 14.4 percent.
Intense price pressure continued to affect the telecom industry, particularly within the area of infra-
structure. This primarily impacted Habia since 36 percent of the company’s invoicing in 2007 per- tained to telecom custom- ers. To manage this devel-
opment, Habia transferred the majority of its volume production within telecom to China, a change made possible because a new and larger plant was opened in China during the year. Lesjöfors also manufac- tures the majority of its telecom compo- nents in China.
Lesjöfors’ sales increased by 11 percent in 2007. The company’s operating income increased from MSEK 222 to MSEK 223.
Sales growth was generated by the indus- trial spring operations and by acquired operations, while chassis springs reported decreasing volumes. At the beginning of the year, European Springs & Pressings Ltd was acquired in the UK, making Lesjöfors the largest UK spring manufacturer.
SECURING HIGH PROFITABILITY Beijer Alma has maintained a high level of profitability for several years. In Habia and Lesjöfors, profitability is significantly above the average of the competi-
tors in the companies’ indus- tries. There are several expla- nations for this. One of the most important is the Group’s focus on niche operations.
This enables the Group to achieve strong international
market positions, despite the limited size of the Group companies. Another explana- tion is the Group’s focus on operations that generate high customer value. This means that sales largely comprise specialized manufacturing, wherein every delivery is adapted to specific customer needs. Normally, this also means that high volumes of standardized products, such as series deliveries to the automotive industry and outsourcing, are not a top priority. This focus also makes it easier for us to avoid excessive exposure to individual customers. Another key compo- nent is the Group’s disciplined operations management, which is based on a clear focus on profitability. Finally, I would like to highlight the long-term approach of the Beijer Alma Group. Building industrial companies requires long-term horizons to generate profits. We have an infinite horizon for our ownership and our goal as a Group is to have long-term earnings and
value growth. However, this long-term approach should not be used as an argu- ment for retaining operations that are stra- tegically incorrect or that are not expected to contribute positively in the future. Within Beijer Alma, we are able to handle this type of decision. In recent years, the Group streamlined and focused its operations, disposing of companies with insufficient potential.
PROFITABLE GROWTH
The challenge in the coming years will be to create profitable growth. It is not enough to maintain a high level of profitability or to simply generate growth. To continue creat- ing value for Beijer Alma’s shareholders, we
must generate growth with strong profitabil- ity – primarily by expanding internationally.
This can be accomplished through organic growth or through acquisitions. The major-
ity of the Group’s operations are conducted in mature markets, in which many minor players compete with one another. As a result, successful geographic expansion is often based on acquisitions of existing players in local markets. Because our oper- ations primarily comprise specialized manu- facturing in short and medium-term series, a local presence and proximity to customers is also required.
In earlier years, acquisitions were con- centrated to Lesjöfors. Following recent years’ strategy work in Habia – and the posi- tive results that were achieved – activities are also being carried out to expand Habia through corporate acquisitions. Acquisi- tion efforts in Habia and Lesjöfors focus on companies with customers in traditional industrial segments. Within these areas, technical risks are relatively low and cus- tomer bases well-diversified. Moreover, the proportion of specialized manufacturing is often high. Such conditions are attractive for us and enable a continued trend of high and even earnings.
Beijer Alma has a strong position for continued expansion. At year-end 2007, the Group was essentially free from debt.
A strong balance sheet – in combination with high earnings and positive cash flow – allows us the scope to continue generating profitable growth and, consequently, fa- vorable value for our shareholders.
Bertil Persson President & CEO
PRESIDENT’S STATEMENT 5
“Building industrial companies requires long-term horizons to generate profits.”
“The overall quality of earnings in the Group has improved markedly compared with earlier cycles.”
“In Habia and Lesjöfors, profitabi- lity is significantly above the aver- age in the companies’ industries”
Strategy
Active commitment
Proactive ownership means that Beijer Alma works closely with the Group companies by setting goals, following up and exercising long-term con- trol. Accordingly, this cooperation does not comprise daily operational efforts, but instead focuses on issues regarding strategic development, acquisitions and investments. As a result, the Group companies gain access to management resources that mid-sized companies may lack.
Long-term ownership
The concept of a long-term approach is key to Beijer Alma’s ownership strategy. Group companies are not developed with the aim of a future exit. Instead, the goal is to create groups of companies with industrially sound structures that are successful long-term, and in which growth and profitability are high.
Beijer Alma’s long-term and proactive approach to ownership shall result in value-enhancing trends for the Group companies’ operations.
This shall be achieved by combining effective business models and business control with strong products, high quality, investments in manufacturing capacity and a focus on inter- national sales.
PROFITABLE GROWTH
CORPORATE ACQUISITIONS
LONG-TERM OWNERSHIP ORGANIC GROWTH
ACTIVE COMMITMENT HIGH
CUSTOMER VALUE
INTERNATIONAL MARKET COVERAGE
HIGH MARKET SHARE
DIVERSIFIED CUSTOMER BASE
High customer value
The majority of the products that are developed and sold by the Group companies are adapted to meet specific customer needs, which creates higher value for our customers. Working with unique product concepts – unlike volume-based subcontracted products, for example – provides more extensive freedom of action when it comes to sales and marketing in selected markets.
International market coverage
To a large extent, the Group companies work with niche products that are manufactured in relatively small series and generate a higher value for the customer. To achieve growth with this type of product, the companies must have broad international sales.
High market share
Quality, breadth of product range and a high level of product and service customization act as the foundation for strong market posi- tions. This foundation enables the Group companies to compete by offering added value in addition to low prices.
Diversified customer base
The Group companies have a common focus on the manufacturing of components. At the same time, Beijer Alma strives to have a suf- ficiently broad customer base, which reduces risk and our depend- ency on individual geographic markets, industries and companies.
Profitable growth
Beijer Alma’s operations aim to generate profitable growth for the purpose of ensuring long-term expansion and development. For the strategic goals to be considered fulfilled, volume growth must be combined with sustainable profitability. As a result, the ability to combine profitability and growth is crucial and instructs all of the efforts made to increase value creation within Beijer Alma. Value creation is achieved in several different ways – for example, by carry ing out supplemental acquisitions and ventures in international markets. Beijer Alma contributes strategic competence, clear busi- ness control and financial resources to its subsidiaries.
DISTINCT VALUE CREATION
“To acquire, own and develop small and mid-sized companies with favorable growth potential.” This is Beijer Alma’s business concept, which means that the Group, using a long-term approach, aims to build an industrial group with sustainable profit development.
Beijer Alma owns and develops unlisted companies, usually as
•
100-percent owner. This is how the Group differs from traditional investment companies, whose holdings primarily comprise other listed companies. Beijer Alma’s long-term ownership philosophy also distinguishes the Group from private equity players.
This approach gives investors access to a unique group of
•
established, unlisted subsidiaries in attractive growth areas.
Access to the capital market provides financial resources for
•
growth. Using a group structure enables Beijer Alma to finance development and growth in a manner that otherwise would not be possible – particularly because the individual Group companies are probably too small to be listed on the stock exchange.
GENERATING EXCESS RETURN
Value creation within Beijer Alma has resulted in a clear excess
•
return. From 2000 to 2007, the average return on shareholders’
equity was 14.6 percent annually. Compared with risk-free interest returns, such as 10-year government bonds, this means that the Group has generated an excess return of 10.1 percent annually.
During the same period, SEK 1 invested in Beijer Alma on Janu-
•
ary 1, 2000 grew to SEK 3.38 by the end of 2007, including re- invested dividends. This corresponds to an annual return of 16.4 percent. During the same period, an investment in the general index, including reinvested dividends, would have increased from SEK 1 to SEK 1.34, or by 3.7 percent annually.
STRATEGY 7 0
100 200 300 400 500
2007 2006 2005 2004 2003 2002 2001 2000
1) Including reinvested dividends.
Beijer Alma’s share performance, indexed, January 1, 2000 = 100 SIX Return Index 1) Beijer Alma 1)
%
Organic growth
Organic growth is based on continuing initiatives within product and market development. Beijer Alma prioritizes this type of growth because it often generates the highest quality and lowest risk. The key advantages of organic development are that the existing organi- zation can be utilized and efforts can be focused on markets and products that the Group knows exceptionally well.
Corporate acquisitions
Corporate acquisitions can include acquisitions of entirely new oper- ations or acquisitions that complement existing subsidiaries. The goal of supplementary acquisitions is to strengthen the companies in selected geographic markets and within specific technological areas. The risk profile of supplementary acquisitions is also attrac- tive because the acquisitions occur in markets and product areas that are already familiar. However, when supplementary acquisitions are carried out, management is in place that can quickly take on the acquired company and make any necessary adjustments.
Risk analysis
Beijer Alma’s operations are affected by several different risk factors that, in the long term, can have repercussions on the Group’s earnings and financial position. In this section, market- related and financial risks are described. Operational risks are reported in the corporate governance report on page 52.
CUSTOMER SEGMENTS
The largest customer segment is other industry, which accounted for 61 percent of invoicing in 2007. This segment comprises several different customers, industries and companies, and every customer accounts for a very small portion of the Group’s total invoicing. Other industry’s current status as the largest individual segment confirms that the Group’s focus on a diversified customer base has yielded results.
Telecom is the second largest segment, with 18 percent of invoicing. The number of customers is smaller and every customer accounts for a relatively large portion of the total invoicing. In this segment, Beijer Alma is more affected by individual customers’
purchasing decisions and choice of technology.
The third-largest segment is aftermarket for vehicles, which accounted for 16 percent of the total invoicing. Operations pertaining to this segment are conducted within Lesjöfors and comprise a large number of markets in northern and eastern Europe. Dependency on certain customers, industries and compa- nies is more extensive within this segment than within the other industry segment, but smaller than within telecom.
Defense is the Group’s fourth-largest segment, with 5 percent of invoicing. Operations pertaining to this segment are mainly conducted within Habia and are dominated by a few large customers.
The defense market operates on a project basis. As a result, sales volumes can vary over time depending on the number of projects in which a company participates.
GEOGRAPHIC SEGMENT
The Group companies conduct sales worldwide and the company’s products are currently found in approximately 60 different mar- kets. Europe and Asia are the largest geographic markets, while sales are lower in North and South America. The single largest market is Europe, including such countries as Sweden, the UK, Germany and Denmark. In Asia, China has grown significantly in recent years, partly due to the country’s strong national growth and partly because the Group has increased its presence in the country through sales and production organizations. At year-end 2007, China accounted for 7 percent of invoicing. Moreover, the country has become a hub for re-exportation to other markets in Asia, primarily Korea and India.
Other industry 61% Telecom 18%
Aftermarket vehicles 16%
Invoicing by customer segment
Europe excluding EU 10%
Sweden 19%
Invoicing by geographic market
0 1 2 3 4 5 6
Source: Nordea
Swedish interest rates
Long-term interest rate (10-year government bond) Short-term interest rate (Stibor 3 months)
2007 2006
2005 2004
2003
% –20 85
190 295 400
2007 2006
2005 2004
2003
Net debt and net debt equity ratio
� Net debt, MSEK Net debt equity ratio, %
200 400
–20 0
20 40 50
80 100
Other EU 56%
Defense industry 5%
Asia 12%
Rest of the world 3%
RISK ANALYSIS 9
MARKET RISKS
Beijer Alma’s most significant market risks are linked to the interest- rate, exchange and raw material markets.
Interest rate risk
Trends in interest rates have a direct impact on the Group through net debt. However, this risk is relatively limited because net debt has decreased substantially in recent years and is currently almost zero.
Currency risk
The Beijer Alma Group’s subsidiaries are export companies with production in several countries and the operations are affected by currency fluctuations. The Group’s single largest currency expo- sure is in EUR, followed by GBP, NOK and USD. Beijer Alma’s exchange-rate policy stipulates that a portion of forecasted net flows in foreign currencies for the upcoming twelve months are to be hedged. Currency hedging provides the scope to take measures to mitigate the effects of any currency fluctuations. In 2007, the USD weakened in relation to several currencies, which resulted in the USD rate dropping from SEK 6.79 to SEK 6.47. The GBP also depreciated in relation to the SEK, dropping from SEK 13.40 to SEK 12.91. The EUR strengthened during the year in relation to the SEK and was listed at SEK 9.47 at year-end 2007, compared with SEK 9.02 at the beginning of the year. The Norwegian krona also strengthened during the year, from SEK 1.10 to SEK 1.19.
Raw material risk
The raw material markets remained turbulent. The prices of various metals – as well as energy prices – affect the Group’s production costs. Key metals for the Group are copper and nickel. In recent years, the prices of these metals have increased substantially. How- ever, in 2007, the price of copper fluctuated between USD 6,500 and USD 8,500 per ton. During the same period, the price of nickel fell to USD 27,000 from a peak of about USD 50,000 per ton at the beginning of the year.
The price of oil rose significantly during 2007, from USD 50 per barrel at the beginning of the year to USD 100 per barrel at year-end. To a certain extent, the price of oil affects the price of plastic raw materials, or polymers, which Habia uses in its cable production. Electricity prices also increased, particularly toward the end of the year.
SENSITIVITY ANALYSIS
Various types of events can impact Beijer Alma’s financial position.
The table to the right shows how profit is affected by price changes in important input commodities and currencies. The sensitivity analysis shows the impact of a 5-percent price change on profit before tax.
0 50 100 150
200 2005
2006
USD NOK
GBP EUR
The amounts shown have been translated to MSEK and refer to net exposure – that is, income less expenses in each currency.
Currency exposure
� 2007 � 2006 MSEK
Exchange rates
SEK/GBP SEK/EUR SEK/USD SEK/NOK
%
Source: Nordea 5
0 10 13
15
2007 2006
2005 2004
2003
0 100 200 300 400 500 600 700
Source: Nordea
Raw material prices, USD, indexed, January 2003 = 100
Nickel, USD
% Copper, USD Electricity, SEK Oil, USD
2007 2006
2005 2004
2003 0 50 100 150 200 250
300 2006
2007
Electricity Plastic raw
materials Steel and steel alloys
Copper
Raw material exposure
� 2007� 2006 MSEK
Sensitivity analysis
Input commodity/currency Change Impact on
operating income
Copper +/– 5% MSEK 5.3
Steel and steel alloys +/– 5% MSEK 12.8
Plastic raw materials +/– 5% MSEK 4.8
Electricity +/– 5% MSEK 0.8
EUR +/– 5% MSEK 10.0
GBP +/– 5% MSEK 6.3
USD +/– 5% MSEK 1.5
The Beijer Alma share was listed on the stock exchange in 1987.
At year-end 2007, the Group had 3,002 shareholders and a market capitalization of MSEK 1,900. Beijer Alma’s policy is that not less than one third of the Group’s net profit – excluding items affecting comparability – shall be distributed to the shareholders.
The Beijer Alma share is listed on the Mid Cap list of the OMX
•
Nordic Exchange Stockholm.
At year-end, Beijer Alma’s share capital amounted to MSEK 114.3
• (114.3).
All shares have a quotient value of SEK 4.17 and entitle the
•
shareholder to equal rights to participation in the company’s assets and earnings.
There are no convertible subordinated debentures or options out-
•
standing.
No issues were carried out in 2007.
•
A total of 6,219,333 shares changed hands during the year.
•
This corresponds to 26 percent of the Class B shares out- standing, an increase of 3 percentage points from 2006.
An average of approximately 24,900 shares were traded each
•
trading day.
OWNERSHIP
The number of shareholders at year-end was 3,002.
•
Of these shareholders, institutional owners accounted for 55.1
•
percent of the capital and 33.6 percent of the votes.
The holdings of foreign shareholders amounted to 10.2 percent
•
of the capital and 4.9 percent of the votes.
LARGEST SHAREHOLDERS
Shareholder Number of shares of which Class A of which Class B Number of votes Share capital, % Votes, %
Anders Wall with family and companies 3,510,120 1,974,000 1,536,120 21,276,120 12.8 37.0
Svolder Aktiebolag 2,714,500 0 2,714,500 2,714,500 9.9 4.7
Livförsäkrings AB Skandia 1,696,420 0 1,696,420 1,696,420 6.2 3.0
The Kjell and Märta Beijer Foundation 1,682,050 0 1,682,050 1,682,050 6.1 2.9
The Anders Wall Foundations 1,562,160 693,000 869,160 7,799,160 5.7 13.7
Lannebo Fonder 1,303,500 0 1,303,500 1,303,500 4.8 2.3
Swedbank Robur Funds 1,243,385 0 1,243,385 1,243,385 4.5 2.2
Didner & Gerge Aktiefond 782,000 0 782,000 782,000 2.9 1.4
Kjell Beijers 80-years Foundation 754,200 0 754,200 754,200 2.8 1.3
The Fourth AP Fund 702,900 0 702,900 702,900 2.6 1.2
Aktie Ansvar Funds 573,200 0 573,200 573,200 2.1 1.0
Göran W Huldtgren, with family and companies 539,010 304,800 234,210 3,282,210 2.0 5.7
Odin Sverige 1, Nordea Bank 503,448 0 503,448 503,448 1.8 0.9
Handelsbanken Funds 377,208 0 377,208 377,208 1.4 0.7
Aktia Sparbank 321,100 0 321,100 321,100 1.2 0.6
Norge, Odin Sverige II, Nordea Bank 315,900 0 315,900 315,900 1.2 0.6
Clearstream Banking S.A. 264,738 0 264,738 264,738 1.0 0.5
The Foundation for Baltic and East European Studies 249,000 0 249,000 249,000 0.9 0.4
Other shareholders 8,336,261 358,200 7,978,061 11,560,061 30.1 19.9
Total 27,431,100 3,330,000 24,101,100 57,401,100 100 100
Source: Shareholder register December 28, 2007, including known changes.
OWNERSHIP STRUCTURE
Size of holding Number Proportion Number of which of which Proportion of Proportion of
of owners of owners, % of shares Class A Class B shares, % votes, %
1–500 1,263 42.2 245,720 0 245,720 0.9 0.4
501–1,000 616 20.5 461,336 1,800 459,536 1.7 0.8
1,001–2,000 493 16.4 747,501 0 747,501 2.7 1.3
2,001–5,000 343 11.4 1,099,983 0 1,099,983 4.0 1.9
5,001–10,000 130 4.3 927,697 0 927,697 3.4 1.6
10,001–20,000 58 1.9 844,719 43,200 801,519 3.1 2.2
20,001–50,000 41 1.4 1,278,247 153,500 1,124,747 4.7 4.6
50,001–100,000 25 0.8 1,770,242 318,100 1,452,142 6.4 8.1
100,001– 33 1.1 20,055,655 2,813,400 17,242,255 73.1 79.1
Total 3,002 100 27,431,100 3,330,000 24,101,100 100 100
Source: Shareholder register December 28, 2007 Number of shareholders % of votes % of capital
Swedish shareholders 2,797 95.1 89.8
Foreign shareholders 205 4.9 10.2
Total 3,002 100 100
The Beijer Alma share
Class of shares Number of votes per share Number of shares % of votes % of capital
Class A 10 3,330,000 58 12
Class B 1 24,101,100 42 88
Total 27,431,100 100 100
